Market Talk
– The dollar was headed for its best week in nearly nine months on Friday as investors scrambled to price in a sooner-than-expected ending to extraordinary U.S. monetary stimulus in the days after a surprise shift in tone from the Federal Reserve.
– Adding to indications of a continued rebound in the world’s largest economy, U.S. data on Thursday showed growing factory activity and easing layoffs, despite an unexpected rise in weekly jobless claims.
– In the two sessions since Fed officials projected possible rate hikes in 2023, the greenback has surged about 1.8% against the euro, while Sterling sat near a six-week low at $1.3936. The kiwi likewise perched at a two-month low at 0.6990.
– The Australian dollar parked at $0.7555, also near the two-month trough of $0.7540 that it hit overnight despite upbeat Aussie data, with job creation beating expectations in May and unemployment diving to pre-pandemic lows.
– Gold prices, which plunged following the Fed comments, edged higher after reaching a low of $1767.10 overnight but were still set on track for a more than 5% weekly loss, for their worst week since March 2020
Chart Focus USD/SGD
Key Points
1. Buy USD/SGD recommendation.
2. Buy USD/SGD at 1.3380. Stop at 1.3345 and target at 1.3485.
3. Exit from monetary stimulus and strong data showing a continued rebound in the US economy are both likely to strengthen the US dollar.
4. Price is likely to find support in the bullish price trend with MACD also hinting of a strong bullish price trend
Fundamental Comments
1. Sooner-than-expected exit to U.S. monetary stimulus is likely to strengthen the US dollar.
2. Strong US data showing a continued rebound in the world’s largest economy is likely to strengthen the US dollar.
Technical Comments
1. Price is likely to find support at Fibonacci 38% correction point and the 20EMA.
2. MACD remains bullish and is hinting of a strong bullish price trend ahead.
Key Levels
| Support | 1.3390 | 1.3350 | 1.3325 |
| Resistance | 1.3435 | 1.3485 | 1.3530 |
Technical Overview
USD/JPY – After reaching a high of 110.82, price has been declining and has reached a low of 110.00 at the point of this writing. Stochastic has a divergence warning but MACD does not have a divergence warning on the 4-hourly chart. 20EMA is flat and neutral at the moment. Price will need to hold above 109.80 or this bullish trend may have ended. We will wait for clearer direction.
| Support | 109.90 | 109.60 | 109.30 |
| Resistance | 110.20 | 110.45 | 110.80 |
EUR/USD – Price continues its decline after the FOMC announcement and has reached a low of 1.1890 overnight. The strong downtrend may not be over even though Stochastic is deep in the oversold zone. MACD is bearish and is hinting of a bearish price trend. 20EMA is pointing lower with a steep slope, hinting of a strong bearish price trend ahead. Look to short into rally higher.
| Support | 1.1890 | 1.1855 | 1.1810 |
| Resistance | 1.1925 | 1.1955 | 1.2005 |
GBP/USD – Price continues its decline following the FOMC announcement, reaching a low of 1.3880 at the point of writing. The strong downtrend may not be over even though Stochastic is deep in the oversold zone. MACD is bearish and is hinting of a strong bearish price trend. 20EMA is pointing lower with a steep slope, hinting of a strong bearish price trend ahead.
| Support | 1.3860 | 1.3830 | 1.3800 |
| Resistance | 1.3910 | 1.3960 | 1.4005 |
XAU/USD – Gold plunged following the Fed comments to reach a low of $1767.10 overnight. Stochastic is deep into the oversold extreme and we may see a pullback but any pullback is likely to be an opportunity to get into the short trade. Both 20EMA and MACD are hinting of a strong bearish price trend ahead. 20EMA is likely to cap rally for another decline to $1750.
| Support | 1778.80 | 1767.10 | 1755.95 |
| Resistance | 1786.90 | 1801.85 | 1818.85 |
NZD/USD – We had a sell recommendation at 0.7100 yesterday for this pair. Unfortunately, price only reached a high of 0.7090 and our order was not filled. Price has declined to 0.6980 this morning and looks likely to continue lower. MACD remains bearish but Stochastic is into the oversold zone. 20EMA is pointing lower with a steep slope, hinting of a strong bearish price trend.
| Support | 0.6970 | 0.6940 | 0.6905 |
| Resistance | 0.7000 | 0.7035 | 0.7075 |